Property & Construction Daily

The Property & Construction Daily provides a sector-specific comment from leading analyst Alastair Stewart. His daily perspective provides a round-up of market statements, news, economics and views from the property and construction sectors.

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June 5, 2024

BOOT, VP. | Economics – Brick deliveries tick up and stock levels ease back

Company news

Henry Boot (BOOT, 211p, £283m mkt cap)

Land Promotion, property investment & development and construction group. Development. HBD, the group’s property investment and development arm, has secured Reserved Matters planning consent for three units totalling 464,000 sq ft at SPARK, Walsall, its £110m GDV  industrial and logistical project. The wider 620,000 sq ft SPARK project is being delivered in partnership with Walsall Council, Homes England, West Midlands Combined Authority and Black Country LEP. The former James Bridge Copper Works site, once the largest undeveloped brownfield site in the Black Country, is currently undergoing specialised remediation works, which HBD is set to complete in Q3 2024. “With optionality to draw down the land in phases, HBD is already seeing occupier interest in this prime scheme and are aiming to begin construction on the first of the three newly consented units in Q4 2024, with a target of being ready for occupation in the summer of 2025”. The first unit is expected to add c.£40m to HBD’s current £154m GDV committed programme.

Vp (VP., 690p, £285m)

Construction equipment rental group. FY (Mar) results. Rev -0.8%, £369m; adjusted PBT -0.9%, £39.9m; stat PBT -91%, £2.9m, inc non-cash impairment of £27.7m for Brandon Hire Station; adj EPS -5.3%, 74.8p; divs +4.0%, 39.0p; net debt, £125m (FY 23, £134m.

Trading: “Strong performance in Infrastructure market with continued demand from rail, transmission and water, and encouraging progress in the Energy market. Challenges remain in general construction, particularly impacting Brandon Hire Station and resulting in a non-cash impairment. This division now has a new management team and its initiatives, including a review of its branch network, are starting to have a positive impact. New group leadership is in place, supported by fresh talent and a simplification of the management structure”.

Outlook: “The group has made a solid start to the new financial year, which we expect to be in line with the Board’s expectations: the infrastructure market remains supportive with a clear pipeline of projects; prospects in the energy market provide confidence.    The general construction market remains challenging. Brandon Hire Station action plan underway with confidence in medium-term prospects. Headwinds remain in housebuilding, with a slight drop in activity levels”.

Economic data

Building materials. Brick deliveries edged up by 1.1% M/M, seasonally-adjusted to 112 million, in April and by 11% Y/Y on a non-seasonally-adjusted basis, data contained within the wide-ranging monthly Building materials and components statistics from the Department of Building and Trade (below, left). Brick stocks – a key factor in pricing considerations – fell by 0.7% M/M to 520 million (below, right), 9% below the recent November peak but 28% above the 10-year average of 410 million. Average prices across all materials were unchanged M/M in April but down 5.5% since the recent July 2022 peak.

Viewpoint: Bricks are a good catch-all measure of the supply-demand dynamics in housebuilding and these are early signs of a pick-up in activity.

brick stocks
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